Utah Gov asks Obama to accept state's exchange

SALT LAKE CITY (AP) — Utah's Gov. Gary Herbert is asking President Barack Obama to approve a health insurance exchange the state already has in place and declare that it meets the requirements of the federal health overhaul.

It's not clear he will get his wish.

Herbert sent the letter Tuesday ahead of Friday's deadline for states to decide if they'll do their own exchange. Utah's exchange was launched on a limited basis in 2009 and fully implemented two years later.

In his letter, the governor asks Obama to proclaim Utah's plan a model for other states, saying the state's program gives 7,600 people at 318 small businesses a choice of 140 health insurance plans. The state is planning on expanding its exchange.

Exchanges are online health insurance marketplaces pioneered in Utah and Massachusetts, although the two states have taken very different approaches.

"The Utah model is innovative in its simplicity," Herbert said.

But significant changes would be needed for it to comply with the federal law and there are two main sticking points, said Jennifer Tolbert, director of state health reform at the nonpartisan Kaiser Family Foundation.

First, Utah's plan is not designed to offer health insurance to individuals as required in the federal law. Secondly, Utah's is not structured to distribute federal tax credits aimed at low income people who are uninsured. Utah plans to open up the plan to individuals in the future.

Erin Shields Britt, a spokeswoman for the U.S. Department of Health and Human Services, said the letter is being reviewed.

Herbert says he needs answers to make a decision by Friday.

He says the plan required in the federal health care law would include fewer choices and make people more dependent on public programs.

"I am confident that if you make this change, several other states will join Utah and request certification for 'state based exchanges' based on our model, thus spreading a proven approach that lowers costs and increases access," Herbert said.

Nationally, there are different assessments of Utah's program, Tolbert said. Some consider the 140 choices within the plan a positive but others say that's too many and overwhelms participants.

Although it was not designed to significantly reduce the number of uninsured in the state, there are detractors of Utah's plan that point out that there are still about 400,000 uninsured people in Utah, or about 14 percent of the population, according to figures from the Kaiser Family Foundation.

The purpose of Gov. Herbert's letter is to send the message that states need true flexibility to be able to run efficient state-level exchanges, said Norman Thurston, health reform implementation coordinator for the state of Utah.

"We have to have ownership of the programs," Thurston said. "We have to have the ability to run them in a way that meets the needs of our populations."

Under Obama's health care law, every state will have an exchange starting Jan. 1, 2014. The exchanges will provide one-stop shopping for individual consumers and small businesses.

Low-income people can find out if they will qualify for coverage through Medicaid. Middle-income people can pick a private insurance plan offered through the exchanges, and in most cases, get federal government assistance to pay their premiums.

Virtually every American must have health insurance starting in 2014. At the same time, insurers will be forbidden from turning down people in poor health or charging consumers more because of a pre-existing condition. The law also limits what insurers can charge older customers, who are more prone to health problems.

States have three options as far as exchanges. They can build their own, they can run one in partnership with the federal government, or they can default to Washington and let the feds set up and operate their exchange.

So far, 16 states and Washington, D.C., have said they will set up their own exchanges, while 19 Republican-led states have opted to allow the federal government in. Another seven states have picked the partnership model, and the rest are trying to decide. States that want to run their own exchanges have until Friday to submit plans, but the deadline for partnership applications isn't until February.

A recent AP poll found that Americans prefer that states have a strong hand in running the exchanges. Sixty-three percent said states should run the new markets, while 32 percent preferred federal control. Republicans heavily favored state control.

This is the second letter sent by Herbert to federal officials regarding his state's health insurance exchange. In November, Herbert wrote to Health and Human Services Secretary Kathleen Sebelius asking for help with "far too many unanswered questions" about the federal alternative.

Herbert, a Republican, slammed the U.S. Supreme Court ruling upholding the Affordable Health Care Act in June, saying that while it "may be constitutional" it's still bad policy.

"It comes down to our fundamental belief that the invisible hand of the marketplace will do a better job than the heavy hand of government," Thurston said.